Barita coming to market with APO
INVESTOR JITTERS have kept the stock market depressed through the coronavirus crisis, but Barita Investments Limited is about to test whether investors are ready to get back into the game.
One investment company previously pulled back its additional public offering, APO, under bearish conditions in which the market had shed 25 per cent of its value. But Barita is coming to market with one of its own, aimed at raising $9 billion, at $49 to $52 per share for different categories of investors. On Friday, the market was down 27 per cent year to date.
The company, which has grown its net earnings by 40 per cent across three quarters, has big plans lined up and needs the cash.
Its prospectus says the APO proceeds will be used for forays in Jamaica and the region. Nearly a half of the targeted funds raised, $4.26 billion, will be used to pay for what Barita described as ‘footprint’ expansion.
Barita General Manager Paula Barclay had previously announced at the company’s AGM last month that they plan to open two additional branches in the near term, in New Kingston and Montego Bay. But the regional plans have not been spelled out.
“Barita is focused on expanding into high growth business lines, markets and market segments. To that end, the company is intending to seek out opportunities to expand geographically into markets that offer diversification benefits and a clear addressable customer base,” said Chairman Mark Myers.
Another $1.8 billion of the APO proceeds will be used to seed new managed funds and expand product offerings.
Myers said that in the 18 months since the launch of Barita’s investment banking arm, the company has finalised financing deals valued at $25 billion.
“We believe the on-boarding of our vice-president, investment banking, Terise Kettle, in March 2020 should propel the investment banking business to greater success into the future. Her appointment has added tremendously to the size and diversity of our deal pipeline,” he said.
Around $1.5 billion is to be poured into the expansion of the segment, including hiring new talent.
Another $1.09 billion will finance upgrades of Barita’s IT infrastructure.
The APO opens for subscription on August 26 and closes September 16. The company plans to issue more than 173.73 million new ordinary shares with the option to upsize the offer with an additional 88.87 million units. Full subscription of the upsized portion would reap another $4.35 billion.
The offer is being brokered by Barita itself.
Deputy Chairman Paul Simpson said the APO was not underwritten because they did not see such an arrangement as necessary for the transaction.
Barita, which raised $9 billion in equity capital from two rights issues last year, currently has a net worth of $15.2 billion and an asset base of $52 billion.
So far, the company has weathered the COVID-19 fallouts, with around nine per cent year on year growth in net earnings in the June quarter, from $910 million to $990 million. But its nine-month results were even stronger, climbing 40 per cent from $1.43 billion to $2 billion in net profit.
Myers said the company outperformed even its own forecast.
“The performance to June is ahead of budget and also ahead of our updated forecasts which took into consideration the potential effects of the onset of the COVID19 pandemic,” he said.